Analyst of the investment company EXANTE Victor Argonov answers important questions for private investors concerning the ICO market of cryptocurrency that has rapidly detonated the stock exchange.
How do you think the ICO market is now suitable for retail, private investment?
Technically investing in ICO is not difficult. On many cryptobirds, ICO tokens are as easy to buy as any cryptocurrency . But the main problem here is the lack of confidence in the integrity of the projects. Not always the funds collected by the ICO method go to the stated needs. Authors may abandon the project or even have fraudulent goals in advance. But now the network community is actively seeking methods to combat this. For example, there are rating agencies of the type where you can get an insight from analysts about the prospects of projects.ICO – (Initial coin offering or initial offer / placement of coins) is a form of attracting investment in new technological projects and startups in the form of issuing and selling new cryptocurrencies to investors. It is also used in the form of “initial
token offer ”. This is a fundraising mechanism, under the terms of which the future cryptocurrency is sold for current, liquid virtual money.
Private investment in cryptocurrency
Can I make a private investor at ICO? What rules should be followed to make the investment successful? What, in your opinion, is an effective investment strategy for private investors? How to choose from a variety of companies that go to the ICO, the one that can bring profit to the investor?
Many tokens at the start of trading are becoming more expensive in the market game – regardless of how the project moves. But it is a matter of luck. And the methods of obtaining a serious sustainable income with ICO are so far only sought by investors. One of the conditions for a successful investment is the ability to estimate the prospects of projects at least approximately. Independently or with the help of the mentioned rating agencies. The second condition is diversification. While the methods of evaluating the success of projects are taking the first steps, it is not worth risking all the invested capital in one project, no matter how good it may seem.
It is better to divide them between a large number of projects. And these are only necessary, but not sufficient conditions. ICO can be attributed to venture investment, which is almost always associated with high risks and requires not only knowledge from the investor, but also a certain instinct.
ICO cryptocurrency market today
How do you rate today’s peak in popularity of the ICO topic? What can this lead to?
The popularity of the ICO theme in recent times is easily explained: the phenomenon has only now become widely known in a positive way. The experience of Ethereum currency in 2014–2015 inspired many investors, but the collapse of the DAO fund in 2016 hit the ICO’s reputation.
Only now the network community has more or less neutrally weighed the pros and cons of the new phenomenon, giving it a green light. And at the same time speeding up the work to make this market civilized. But in the case of high-profile failures, the development of ICO-investment may slow down again. Another hindrance may be government policy.
For example, in July in the US, the Securities and Exchange Commission (SEC) equated ICO with traditional equity placement (IPO). The same rules now apply in Singapore. Now, issuers of ICO and stock exchanges selling tokens will have to be officially registered according to the standards of the classic stock exchange market. This may increase the reliability of investments, but it will inevitably complicate ICO and deprive this tool of a significant part of the initial advantages over a bureaucratic IPO.
Did you invest in someone’s ICO yourself? Maybe they are ready to tell you how successful the investments turned out to be?
So far it has been only once, at a token amount. I saw a new project coming out on ICO, and “not looking” invested for the sake of experiment. So far this experiment has been successful: tokens have risen in price. But I did not try to develop a serious investment strategy.
What companies, managing in Russia, help retail investors to invest in ICO?
An example of a well-known international initiative in this area is ICONOMI, a platform for managing crypto-investments, whose own ICO was held in 2016. One of its slogans is to give investors “super-profits that were impossible in the conditions of the old economy.”
Now the company is already working, its tokens have risen by an order of magnitude since the beginning of the year, and the capitalization exceeded $ 250 million. But so far it is difficult to say to what extent this growth is an indicator of a company’s success, and to what extent it is the result of a general increase in investor interest in the crypto market.
As for the Russian managers of ICO-investments, I know only the Satoshi Fund, which announced the closure at the end of July 2017. Probably also some traders who provide asset management services, invest part of the funds in ICO.